Definition

Return on equity

Net income as a share of average shareholders' equity — the accounting return the company earns on its owners' capital. Read it through the DuPont decomposition to see whether profitability, efficiency, or leverage is producing it.

Formula

ROE = Net income ÷ Average shareholders' equity

Drivers — what actually moves it

Profitability: net margin — see the DuPont decomposition.
Efficiency: asset turnover — revenue per asset dollar.
Leverage: the equity multiplier amplifies returns in both directions.

Where to find it in the filing

Income statement + balance sheet. 10-K Item 8 — net income from the income statement; shareholders' equity from the balance sheet (average opening and closing).

XBRL concepts Echelon grounds to: NetIncomeLoss · StockholdersEquity

Sector caveats — where this breaks

Negative or near-zero equity (large buyback programs) makes ROE meaningless — Echelon fails closed rather than print an absurd figure.

Drill it in a live lesson DuPont analysis Net margin

Drill return on equity on another filer

Graded exercises that use this metric — each one against a different company's own filed figures.

NVIDIA's DuPont decomposition: the transfer test Apple's DuPont decomposition: three ratios, one return Airbnb's DuPont decomposition: three ratios, one return Abbott's DuPont decomposition: three ratios, one return Adobe's DuPont decomposition: three ratios, one return Analog Devices' DuPont decomposition: three ratios, one return

Educational use only — not investment advice. Figures come from public SEC filings; Echelon teaches you to analyze data, it never recommends buying or selling any security.